Word on the Street

For savvy distributors who do their homework and understand the system, streetlighting upgrades in cities/municipalities can be great opportunities.

By Susan Bloom

A recent MarketsandMarkets™ research study forecasted that the street and roadway lighting market will grow at a CAGR of 6% over the next five years and be valued at nearly $11 billion by 2022.  With an estimated 26-44 million streetlights in the U.S. – many housing older, less-efficient high pressure sodium, metal halide, or mercury vapor technology — and over 600 cities nationwide reporting that they’ve either installed or plan to install LED streetlights according to a 2013 study by the DOE’s Municipal Solid-State Streetlighting Consortium, the opportunity for distributors to help upgrade the lighting in America’s cities and towns is robust.

That is, if distributors understand the rules of the road in that complex and dynamic market segment.

“Lighting upgrade projects in cities are absolutely great opportunities and we’ve seen a definite increase in the number of streetlighting projects in our area since the beginning of the ‘LED revolution’ years ago,” shared Nelson Flores, vice president/general manager of over-century-old, Los Angeles-based Norton Electric Wholesale (www.nortonelectric.com), which has a contract to provide streetlight heads and other electrical materials to the County of Los Angeles (which encompasses the city of L.A. and has a population of over 10 million). Since the city and county of Los Angeles first became interested in and began testing LED products for streetlighting purposes 8-10 years ago, “these upgrades are underway and more will be done, especially since LED products have improved dramatically over the years and have offered increasingly greater lumen output and efficacy as well as better design for the spread of light,” he said.

In New York City, for example, the Department of Transportation, which maintains over 250,000 street lights throughout the Big Apple, is currently upgrading to LEDs to save an estimated $6 million in energy and $8 million in maintenance costs annually, while Los Angeles’ Bureau of Street Lighting reports that more than half of that city’s 215,000 street lights have already been retrofitted to LEDs and that upgrades will be ongoing.

Everywhere in between, cities and municipalities are boarding the technology train and pursuing the benefits of LED upgrades.  While he noted that years ago, southern California was ahead of other cities across the nation when it came to LED upgrades, Flores confirmed that today, distributors and city representatives he speaks with in the south, southwest, Midwest, and middle Atlantic states – areas which traditionally weren’t always as financially motivated as California to upgrade to LEDs based on their lower utility kWh rates – are all reporting greater activity in this arena.

“Everyone is moving to LEDs,” Nelson said.

Taking it to the Street
As noted by Flores and Scott Jackson, Graybar‘s national business development manager for Smart Cities, however, securing this business requires thorough research, persistence, and business savvy.  Following, Nelson and Jackson share some of their best tips to help distributors cash in on city/municipal street lighting upgrade projects nationwide:

• Build Relationships – Flores confirmed that inroads into these projects can often be based on ‘who you know.’ “The street lighting business in cities can be very difficult to break into and is very relationship-oriented, often through contractors, agents, and manufacturers aligned with those customers,” he said. “As a distributor, it’s helpful to foster relationships with manufacturers and approach them on what they have to offer in the category of roadway lighting and what they’re doing to market to cities. Some manufacturers have very strong partnerships with cities and government agencies,” he said.
• Do Your Homework – “Depending on the relationships and resources they have in place, cities and government agencies can put specs out to bid to either contractors or distributors, so you need to find out exactly who writes those specs for your targeted city or town,” Flores said.  “The actual decision-makers may be the city engineers, for example, not the street lighting department, so you need to investigate this and also understand their exact specs, because each municipality has different policies on this and those policies may vary even within different departments in the same city.  Ultimately, you’ll need to show them why your product/solution is better than what they’re using.”
• Take a Holistic Approach – “We encourage municipalities to not only consider lighting, but to also take a more holistic approach that involves lighting, lighting controls, sensors (such as CO2, parking, traffic, etc.) while including the electric, water, and gas utilities in the planning process,” advised Graybar’s Jackson.  “This holistic approach is incredibly important for the municipality’s future IoT application.”
• Be Prepared for a Phased Approach – Because every streetlighting project is unique, Jackson recommends that distributors be ready for any project configuration.  “Some municipalities only want a stand-alone lighting upgrade without controls or other IoT networking; in those cases, the process has more to do with city council-type authorization,” Jackson said.  “Other projects, such as a smart grid that includes electric, water, and/or gas application, can be longer in length and more involved, with the electric utility driving the decisions. In those instances, lighting is generally ‘Phase II’ and the project requires a larger capital expenditure as it’s a larger-scale, more complicated process.”

  Flores agreed.  “Cities typically do different sections one at a time, so projects are often approached in phases and distributors may have to bid on each phase,” he said.

• Recognize the Benefits – “A good distributor will have the knowledge to guide the municipality by making technology and product recommendations,” said Jackson of a savvy distributor’s unique position in helping to steer city streetlighting upgrade projects.

  Flores agreed that the benefits of getting your foot in a municipal customer’s door can be far-reaching. Based on the complexity involved in a city’s selection of the right distributor partner in the first place, “if you’re successful getting in, the city may not want to go through the process again,” Flores said. “Once you’re an approved supplier, the city may not open up new projects to bid, which is a sought-after position. So while securing the first project may take a lot of work, it can be very rewarding relative to future orders,” he confirmed. “That’s why you do it.”

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Bloom is a 25-year veteran of the lighting and electrical products industry. Reach her at susan.bloom.chester@gmail.com.